ASL-Sourcing in Procurement An Oracle White Paper ‘October 2004Table of Contents Executive Overview. Introduction. ASL Attributes.. Global & Local ASL......... Sourcing Rules. Assign Sou Setup for SoUFEINE nnn - Create a Blanket Purchase Agreement Sourcing Cyel Creating a Release from a BPA for Creating a Standard Purchase Order from a quotation for a Catalog Item... - Creating a Standard Purchase Order from a Contract Purchase Order for a catalog item. Creating a Standard Purchase Order from a Contract Purchase Onder for a Non Catalog hem 16 PO Create Documents Workflow in Sours IT Advanced Features of Automatic Sourcin; -20 Steps to implement Automatic Sourcing... Tables 3 3 3 3 4 4 4 4 5 7 12 1B 13 iExecutive Overview Sourcing is a function with strategic importance within the broader context of procurement. Infact it is a subset of procurement with strategic context. Sout tage for the entire company’s purchase for direct and indirect materials, and involves highlevel, company-wide approaches to obtaining materials and services, identifying and evaluating potential suppliers fo meet those needs, negotiating and implementing contracts with selected suppliers, monitoring and improving ongoing supplier relationships, ‘This white paper focuses oi the features that Sourcing provides in the Procurement module of Oracle Applications. 1 lays down the road map towards implementing sourcing and describes in detail the sourcing cycle with related setups. It also discusses the new sourcing feature in Oruele Applications- Automatic Soureing, Introduction Oracle Purchasing allows users to aiitomatically soutce items from suppliers based on the sourcing tuies and purchase agreements, The business needs of Sourcing are * Awtornatically default suppl onto sequisilion * Source the item from negotiated purchase agreements © Reduce manual intervention ‘Siurcing in Oracle Applications, can be implertiented either to the requisition created in procurement or core purchasing. The only difference lies in setup techniques. The setups for both of the methedologi this paper. Important Sourcing terms in Oracle Purchasing Approved Supplier List (ASL) All procurement organizations maintain lists that associate the items and services they buy from supplier organization, Data stored in a global repository containing relevant details about each item/supplier/supplier site relationship. is known as an Approved Supplier List (ASL). ‘This repository includes inforiation about all suppliers with business statuses ranging from “Approved" (the supplier has demonstrated the ability to salisfy rigorous quality, cost, and delivery requirements over a sustained pertod) 1 “Debarred’ (the supplier is temporarily/permanently disallowed on purchase orders duc to performance failure, ethics violations, etc.) or New! if you have never placed a purchase oder with the supplASL Attributes For each ASL entry, ASL attributes specify the Release Generation Method, purchasing Unit of Measure, source Blanket Agreements and Catalog Quotations for automatic reference during dacument creation: Global & Local ASL Global ASL catries are valid for all Inventory Organizations. Local ASL entries are specific to a single Inventory Organization, Sourcing Rules Sourcing rules define inventory replenishment method for either a single organization or all organizations in the enterprise. They describe sourcing supply: for any organization, they answer the question “where da I get part A from?” User defines rankings and % allocation for replenishment sources in the form of Sourcing Rules. Assign Sourcing Rules Sourcing rule must be assigned to a particular iter and/or organization, These 4s where various sourcing assignments ure grouped together in assignment sets, Thi strategies define a particular supply chain network. In an a assigned at different levels, as follows: jgnment set, sourcing can be An item across all organizations A single item in an inventory organization -ms across all organizations A category of items in an inventory organization + AllorganizationsSetup for Sourcing Sourcing setups in Oracle Applications is accomplished using the series of steps described below. An important prerequisite for Sourcing is that items and suppliers should be defined, Define items. ipanzaton [V1 Mision Op Rcegt Clore Toren [7 Unita | IC abe | Pree Toanece [0% Encumbrnce Accourt Espino Acco Sioa Cs Assigar Item to Inventory organizationCreate suppliers aud supplier sites in te Suppliers window, ‘Aternate Name ty [Cio Province | Puovincet Langage American Engl ShipToLocaton (it. Seante Bil-To Location (WI-New York City ‘Shp Ve [UPS —) Foe [ongin Freight Terms [Dus County of gn Create Doit emo fom RTS TonsactonSteps to implement sourcing are Create a Blanket Purchase Agreement PO. Rey M218 “Type Blanket Purchase ShipTo at. Seat bulTo iNew York Ci ye Goch Mer Sas lapped a oo fT (Goets fer Seneha | [WSCNIEE —[Sowcha tom ees [= ——=————— EE ee er L (Ee ‘tem lem for Sourcing ‘Sourcing item (Barr Teams (BiceBeats) (Se Defining the Approved Supplier list ‘To define the Approved Supplier List (ASL) 1. Navigate to the Approved Supplier List window as follows Navigation: Supply Base Management -> Approved Supplier List. In the Organizations window that appears, choose the ship-to organization for which to define Approved Supplier List (ASL) entries. This will be the owning organization, 3. Am ASL can be created for either of the following a, Item- assigns a supplier to a particular item. >. Commodity « assigns a supplier to a group of items belonging to a category (or commodity), 4, Select an item or commodity, 5. One of the following Business type can be selected:a. Direct (Supplier): This option should be selected when the supplier sells his products or services directly to buyer organization. Specify the supplier and supplier site, b. Manufacturer: This option should be selected when the supplier does not sell his productservices directly to the procuring organization but sells it through distributors ¢. Distributor: This option should be selected when the supplier sells, products made by manufacturers. A distributor needs to be associated ‘with manufacturer, which implies that a manufacturer should be defined in ASL before defining its distributor. 6. Select the supplier’s approval status. Use one of the default statuses provided. 7. Navigate to the Record Details Alternate region. 8. Select one of the following in Global: 1) Yes- This ASL entry is valid forall inventory organizations in this, Operating unit. 2) No~ This ASL entry is local, meaning that itis valid only for the organization chosen in the Organizations window when first opening the Approved Supplier List window. Note: Iftwo ASL entries exist for the same item or commodity, one Global entry that applies to all organizations and one local entry that applies only to the local inventory organization, the local entry takes precedenc [iam to Soar Source document information can be specified in the Supplier-ltem Attributes window.To define the supplier and commodity/item attributes: 1. Navigate tothe Supplier-Item Attributes window by choosing the Attributes button in the Approved Supplier List window 2. Choose the Purchasing UOM. 3. Choose the Release Generation Method from the following options: 4) Automatic Release/Review: Automatically generates releases, but requires a separate step for approval, “Create Release Program” is used to cereate releases in this case. Release: Automatically generates approved releases. This is not available if encumbrance is turned on, "Create Release used (o ereate release in this ease, ¢ Using AutoCreate: Release is created by the workflow and “Create Release Program” is not required. NOTE: If Requisition Line(s) are for a one-time item then the Release Generation Method is not considered and the requisition is a candidate for ‘Automatic ereation by the CREATEPO workflow. This Occurs in the workflow (CREATEPO) after the workflow has verified that the Requisition has the required information for automatic releas 4, One of the following attribute groupings can be selected from the Alternate region: a. Enter a unique Seq (Sequence) Number. Sourcing picks up the document as per the sequence, ie. if there are two documents specified in ASL having sequence number 1 and 2, then the document with sequence number | will be picked up irrespective of whether itis a Blanket or Quotation b. Following Document types can be selected: --Blanket ~Quotation A requisition with a quotation as a souree document can be created into standard purchase order. A requisition with a blanket purchase agreement ss « source document can be created into a release (unless the ASL is setup for this item as a Cosigned Inventory item, If this is the case then a Standard PO is, ‘created instead of a Blanket Release) 9&. Choose a Document Number, «, Choose a Line Number, The Status and Effective Dates for the document, if any, are displayed. Puchsng 00M as Friece Mato elare Ung Ata ict Url Ternce * County of Oxgin [—] 1 Define a sourcing Rule ‘To define a sourcing rule: 1, Navigate to the Sourcing Rule window, 2. Enter a unique Sourcing Rule name. 3. Indicate whether this sourcing rule is used forall organizations (global) ora single organization (local). If the sourcing rule is local, enter an organization name; otherwise, the current organization will be the receiving organization, 4, Enter effective dates. A start date is mandatory, but entering an end date is optional, 5. Enter an allocation percentage 100%Name [Rue for Sourcing aor: Paring Active Description [Test mule for sourcing (Oi com [ (Sony From, Us —emective Date ate E Os = te gg =e : - pe RT eae secon) | f Toa sourcing mule: 1. Navigate to the Sourcing Rule/Bill of Distribution Assignments window, 2. Enter an assignment set name and description, Note: The assignment specified in profile option MRP: Default Sourcing ‘Assignment Set is the only one used by Purchasing during the sourcing process 3. Enter an Item/Category if the selection far the Assign’ To Type is Item or ltem-Org. 4, Enter the sourcing nule as the Type, 5, Enter the name of the sourcing rule. 6. Save the form. ‘Assignment Set [Sat for Sourc Description Test Set fr Sourcing (0 ~ Assignments ‘Sourcing — 5 si ZoProfle Nome Detaut Valve User Value [ure-detaun Sourcing Assignm [Supplier Scheduling (Set far Sourcing 5 _—=S—SSSS_SSS= Sourcing Cycle in Core Purchasing Create a requisition far the Item for Which the Sourcing Rule and Approved Supplier List has been created, ‘The Supplier and Supplier Site defaulted from the Soureing Rule. Navigate to Source Details Alternate region. ‘The Blanket Purchase Agreement, which was specified in the ASL, is now attached to the Requisition, a= Sie bocongeate 3. 6. Approve the requisition. Run the Workflow Background Process with the following parameterseit Type: PO Requisition Approval Process Deferred: Yes Provess Sek; No Process Timeout: No. This step is not required if using the Create Documents workflow in Online Mode, which is determined by the value of Requisition Approav! workflow item attribute = “Send PO Autocreation to Background” is set to No. If this is set to No then the Create Documents workflow will be done in online mode, If sel to yes it will be sent to the Background and this step is required Sourcing Cycle in iProcuremen’ Soutcing can also be used in iProcurement. Following types of documents can be created in iProcurement with the help of Sourcing i) Creating a release from a BPA for a catalog item. ) Creating a standard purchase order from a quotation fora catalog item. ‘Creating a standard purchase order from a contract purchase order for a catalog em. iv) Creating « standard purchase order from 2 catalog item, contract purchase order for anon Creating a Release from a BPA for a catalog item Following steps should be followed in order to create a release from a BPA fora catalog item, i) Create one item. ii) Create one BPA and ASL forthat item and attach the BPA to the ASL for this item, iii) Extract item, BPA and ASL in iProcurement Note: Following points to be taken care of while extraction. Item List Price should be specified in ftem Master in Purchasing tabbed region Item should be attached to 4 category, which should be web enabled. Category should be extracted before Item: Owning Org of ASL should be same as the Inventory Organization specified in Financial System Parameters. iv) Search for the item in iProcurement. v) Create a requisition in iProcurement for vi) Approve the requisition. Run the workflow background process is “Release using Autocreate”and if the Requisition Approval Workflow item ‘ltribute “Send PO Autocreation to Background” is set to yes. If “Send PO ‘autocreation to Background” is set to No then this step is not required.) Release Generation Method in ASL‘The CREATEPO workflow performs the following checks before creating a release, Wstatus output for lem Type CREATEPO provides the status of these activities, Does Req Line Have Enough Information To Create Document? Does The Req Line Have Valid Supplier Information? Does the Req Line Reference a Valid Blanket or Quotation? Also it validates the Source document extracted for that item and the Release Generation Method from the extracted ASL. Ifthe Requisition Line(s) are for a one time item then the Release Generation Method is not considered and the Requisition is a candidate for automatic ereation by the CREATEPO workflow. If all the above conditions are satisfied then it will create the release, Creating a Standard Purchase Order from a quotation for a Catalog Item. Following steps should be followed in order to create a Standard PO from 2 Quotation for a catalog item. i) Create one item ii) Create one quotation and ASL for that item, Attach the quotation in ASL. iii) Extract item, Quotation and ASL in iProcurement iv) Search for the item in iProcurement v) Create a requisition in iProcurement for this item vi) Approve the requisition, 4i) Run the workflow background process NOTE: If the Requisition Approval Worlflow item Auribute “Send PO Autocreation to Background" is set to Yes.If “Send PO Autocreation to Background’ is sei to No then this stepsis not required ‘The CREATEPO workflow performs the following checks before creat Wistatus output for temType CREATEPO provides the status of these Does Reg Line Haye Enough Information To Create Document? Does The Req Line Have Valid Supplier Information? Does the Req Line Reference a Valid Blanket or Quotation? Also it validates the Souree document extracted for that item, [fall these conditions are satisfied then it will create the Standard PO.Creating a Standard Purchase Order from a Contract Purchase Order for a catalog item. i) Create one item ii) Create one contract purchase oder and ASL for that item. Contract is not specified in ASL. ) Extract item and ASL in iProcurement, iv) Search for the item in iProcurement. v) Create « requisition in iProcurement for this item vi) Approve the requisition. vii) Run the workflow background process. NOTE: If the Requisition Approval Worlflow item Attritnite “Send PO Autocreation to Background’ is set to Yes.If “Send PO Autocreation to Background” is set to No then this stepsis not required ‘The CREATEPO workflow performs the following checks before cresting a release Wistatus output for tem Type CREATEPO provides the status of these activities, Does Req Line Have Enough Information To Create Document? Does The Req Line Have Valid Supplier Information? Does the Req Line Reference a Valid Blanket or Quotatio this case) Should Contract be used to AutoCreate Doc? (Which will be yes and will come from workflow attribute) Does Contract Info Exist in Req] Is Contract Required on the Req! No) Does Contract Exist and Allow Creation from Contract there in core purchasing) (Which will be No in "7 (It is No because contract is not extracted) 2 (This needs to be set in workflow attribute as (Yes beeatise contract is Now as it gets the details from the souree document in core purchasing it will create a standard Purchase order,Creating a Standard Purchase Order from a Contract Purchase Order for a Non Catalog Item i) Credie one cotitract purchase Order in core purchasini ii) Create one non catalog requisition in procurement iii) Specify the supplier and site (should be same as in the contract purchase- order Approve the requisitionRun the workflow background process. NOTE: If the Requisition Approval Worlflow item Attribute “Send PO Autocreation to Background’ is set to Yes.If “Send PO Autocreation to Background’ is set to No then this stepsis not required ‘The CREATEPO workflow performs the following checks before creating u release. Wistatus output for Item Type CREATEPO provides the status of these activities Does Req Line Have Enough Information To Create Document? Does The Reg Line Have Valid Supplier Information? (As given during Requisition creation) Does the Req Line Reference a Valid Blanket oF Quotation? (Will noc be there in this case) Should Contract be used 10 AutoCreate Doc? (Workflow attribute) Does Contract Info Exist in ReqLine? (No as Contract PO is not extracted) Is Contract Required on the ReqLine? (Workflow attribute) ‘Should Non-Catalog Request AutoSource From Contract? (Workflow attribute) Does Contraet Exist and Allow Creation from Contract? (Yes as its there in Core purchasing)PO Create Documents Workflow in Sourcing ‘The PO Create Docurnents Workflow is used in Sourcing to create the releases from BPAs and standard purchase orders from Quotations automatically. ‘The wii file involved is poxwfaie.wft. Follow the below steps in order to configure the PO Create Documents Workflow Open the Workflow file in Workflow Builder, Expand Attributes, Double Click on the attribute “Is Automatic Creation Allowed” Specify the Walue as *Y" PepeFollowing attributes need to be set for ‘A) Generating Release from a BPA in Sourcing SrNo | Attribute Name Value | Required 1 Is Automatic Creation Allowed? ¥ ‘Yes 2 Should Workflow Create The Release? | Y Yes 3 Is Automatic Approval Allowed? ¥ Optional If the Attribute “Is Automatic Approval Allowed! is set to Y then releases that are ereated will be automatically submitted for approval. Whether the Release is approved automatically ar nat depends on if Buyer that defaults on the Release has approval authority at the time af Release creation, Ifthe Buyer does not have authority the Release will be forwarded in an IN PROCESS status to the next approver in the Buyer's Approval Hierarchy, B) Generating Standard Purchase Orders from Quotation SrNo_| Attribute Name Value Required 1__ [Ts Automatic Creation Allowed? ¥. Yes C) Generating Standard Purchase Order from 2 Contract Purchase Order in iProcurement SrNo_[ Auribute Name Value Required 1 [1s Automatic Creation Allowed? ¥ Yes 2 | Should Contract be used to autocreate | ¥ Yes Doe: Should non-catalog requests sourced from contract? J [Is Contract Required on Requisition Line? (This isan optional item attribute ~ it can be setup to Yes or No and the systern can still create PO's from Requisitions that have contracts steup be auto 2) =< No‘The attribute SEND_CREATEPO_TO_BACKGROUND should be set to Y if the PO Autocreation has to be sent to Background,Advanced Features of Automatic Sourcing Oracte Purchasing enables the automatic creation of Sourcing Rules, Sourcing Rule Assignments and Approved Supplier List entries during Blanket Agreement approval submission. The system automatically creates the relevant entries, once the Blanket Agreement is approved, 1) A new Profile Option “PO: Allow Auto-generate Sourcing Rules and ASL” has been introduced. The default value is "None". In order to activate this feature, the profile option value needs to be set to either “Create Only" or “Create and Update”. If the value is set to “Create only” then the “Enable Automatic Sourcing” checkbox and the "Release Generation Method” field are visible and can be updated on the Approval window. If the value is set to "Create and Update”, then the "Enable Automatic Sour Checkbox, the "Update Sourcing Rule and ASL Entries’ ckbox and the "Release: Goneration Method’ field are visible and can be updated on the Approval window. Note: If the Archival mode being used for Blanket Agreements is "Archive on Print”, this, feature cannot be used and the new fields and checkboxes would not be visible in the Approval window. Uset must select "Archive on Approve” to aise this feature, 2. Sourcing Rule Name Prefix can be customized. The prefix value is read from the activity attribute "PO Sourcing Rule Name Prefix" in PO Approval Workflow, The default value is "PURCH". Note: The new Sourcing Rules will be assigned at the Item Level and willl be added to the assignment set that is specified in the profile option "MRP: Default Sourcing Rule Assignment set”, The ASL will be created as a Global ASL, ‘This process will update existing Sourcing rules only if all of the following are true: 1. The sourcing mule is not assigned to any other item. 2, The Blanket purchase order Start and End Dates are not null, 3. If the update requires extension of any existing effective period in the Sourcing Rule, there ean be only one Supplien/Site for that effective period and must mate the supplier/site on the blanket purchase order. 4, The blanket effective period do not overlap multiple effe Rul periods in the Sourcing The process will try to ereate or update Approved Supplier List entries even if Sourcing Rule ereation/update failed for the Blanket Agreement Tine item,For exception reporting, run the Purchasing Interface Errors report with a source type of "ASR - Automatic Sourcing Rule Builder to view the exceptions encountered during the creation of sourcing rules and/or approved supplier list entries. Steps to implement Automatic Sourcing i) Create an Item. ) Set the Profile Option PO: Allow Auto-generate Sout Rules iii) Set the Profile Option MRP: Default Assignment Set to the Set in which Sourcing Rule will get attached. iv) Create a BPA. Ensure that the effectivity dates are specified v) Approve the BPA. In Approval window check the checkbox Create Sourcing Rule and setect the Release Generation method 2PO, Few 220 ‘Seseler Supple ShipTo. Mt. Seatie Type Blanket Puchane ‘cisied OCHO oun Ste SOURCING SITE ‘contet BeTo VistlewYork Gy Cunncy USB vaste [— ‘PEnite Aortic Sourcing Aoleve Generation Method [Rianne Using AoC =) Note: Please note that this checkbox will only be enabled when the Profile Option PO: Allow Auto-generate Sourcing Rules is set. vi) Run the Workflow Background Process for item type = PO Approval ( even if the sytem is setup to-use PO approval in online mode this background process ‘must be run to create or upalate the ASL / Sourcing Rules for the data on the Blanket Purchase Order submitted for approval. 2om Tres POApproval Misi Thowshals MavimumTwestel[ pose ean a Process Stuck (Wo 2 = | aaa = 7 vii) ASL is automatically generated with the document attached in the Attribute. Release Generation Method has also been populated automatically, ss mete ae fat Mato aoe sng Asta tem fatto) Cormosty [| Pree pute Tourer | Sunnie appl torsewd Sev (SOURGHESH Cait On [—] (i 23Vili) Sourcing Rule is also generated and attached to the assignment set specified in Profile Option MRP: Default Assignment Set, “sssignmect Sot [Sat for Sourcing Description Test Set fr Sourcing (0 5 eee eee Ha eee | ix) The Sourcing Rule will show the same Supplier/Supplier Site with 100% allocation and same effectivity dates as that of BPA, owe [PORCH 2017 0g Planing Actve Descnptien | (1 com [7 (Gomer: —Fflective Date From Oate__ Ta Date [tocr201—es.ocrams |= — i = = Shipping Organization aoe ‘Supper trast oo eee ee eee encecnn al CFI — oa uTables involved in Sourcing 1. PO_APPROVED_SUPPLIER_LIST PO_APPROVED_SUPPLIER_LIST stores the relationship between an item or commodity; a supplier, distributor, or manufacturer, ship-to organizations; and approvalicertification status, 2, PO_ASL_ATTRIBUTES PO_ASL_ATTRIBUTES stores all information for the supplier/itenm/organization relationship defined in PO_APPROVED_SUPPLIER_LIST. This information is maintained separately to allow cach organization to define its own attributes, even if using a Global ASL entry for the supplierfitem relationship and approval status, 3. PO_ASL_DOCUMENTS PO_ASL_DOCUMENTS stores sourcing references to supply agreements, blanket agreements, and catalog quotations associated with particular suppliers and items in PO_APPROVED-SUPPLIER_LIST. 4, PO_ASL_STATUSES PO_ASL_STATUSES stores the user-defined approval/certification statuses for 5. PO_ASL_STATUS_RULES PO_ASL_STATUS_RULES stores the business rules associated with each defined ASL status, 6. MRP_SOURCING_RULES MRP_SOURCING_RULES stores soui Define Sourcing Rule form populates 7. MRP_ASSIGNMENT_SETS MRP_ASSIGNMENT_SETS stores information about Sourcing Assignment Sets, ‘The Define Assignment Sets form populates this table. 8. MRP_SR_ASSIGNMENTS MRP_SR_ASSIGNMENTS stores the assignment of sourcing rules ‘or bills of distribution to items, organizations, category. or al the global level. The Assign Sourcing Rules Form populates this table,9, PO_ASL_ATTRIBUTES_VAL_V (view) POQ_ASL_ATTRIBUTES_VAL_Y isa view used by the Create Documents workflow that is created from table PO_ASL_ATTRIBUTES and table PO_APPROVED_SUPPLIER_LIST. Summary Purchasing provides great flexibility in implementing Sourcing. ‘To use this feature successfully, business needs and supply chain strategy should be identified, With the correct setups and different techniques of Sourcing outlined in this paper, you have gteater flexibility than ever before to make this feature suit your business processes. By implementing this sourcing functionality employer will give full access to the users and free up the purchasing department to concentrate on securing the best deals for the organization, Acknowledgement We wish to recond our sincere appreciation towards: ‘Mike Williams, Linda Johnston, Lisa Oinonen and Starr Smelley of Procurement Team for reviewing this paper and for making it complete with their feedback We are grateful to Adiraju Sastry and Chandu Tadanki for their constant encouragement and support. References Gracte Purchasing User's Guide Release 11i (Part No.A82913-04)i Author: Nain basu & Rat Arura (CPIM) Oracle Corporation World Heedquarters ‘500 Oracle Parkoray Redwood Shares, CA 9465 USA. Woridide Inglis: Phone: #LaS000,7000 Ps + 16805067200 sorts (Oriel ia registered tridermark af Oracle Corporation, Various pracic and versie anes referenced erin my he rem ‘ Oracle Carparatian. AI other pedi and service names ‘mentioned nay be traders of their respective awners ‘Copyright © 2008 Oracle Corporation Aldi resered